net income expected to decrease? The degree of operating leverage (DOOL) for SummitCorp is 3.2 when sales are $200,000 and net incomeis $50,000. If sales decrease by 5%, by how much (indollars) is net income expected to decrease?

Given:Degree of Operating Leverage (DoOL) = 3.2Sales = $200,000Net Income = $50,000Sales decrease =…

Answered: The degree of operating leverage (DOOL)…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 10P

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The degree of operating leverage (DOOL) for Summit Corp is 3.2 when sales are $200,000 and net income is $50,000. If sales decrease by 5%, by how much (in dollars) is net income expected to decrease?